Company Law Tribunal Orders Insolvency Proceedings Against National Textile Corporation

The National Company Law Tribunal (NCLT) has ordered to initiate insolvency proceedings against state-run National Textile Corporation

The National Company Law Tribunal (NCLT) has ordered to initiate insolvency proceedings against state-run National Textile Corporation (NTC) after admitting a plea by one of its operational creditors claiming default of around Rs 14 lakh.

The New Delhi bench of the NCLT has also appointed Amit Talwar as an interim resolution professional (IRP), suspending the board of NTC and has also declared a moratorium against the PSU as per the provisions of the Insolvency & Bankruptcy Code (IBC).

A two-member NCLT bench also rejected the claims of NTC and said the dispute it raised over the due amount claimed by its operational creditor is merely a "moonshine dispute” and said default has occurred for the payment.

This is probably for the first time since the code has come into effect that insolvency proceedings against a central government-owned public sector unit (PSU) has been initiated.